ADVOCATES:Ann O'Connell - Assistant to the Solicitor General, Department of Justice, for the United States as amicus curiaeStephen R. McAllister - Solicitor General of Kansas, for the petitionerDavid D. Cookson - Chief Deputy Attorney General of Nebraska, for the respondent

Facts of the case

The Republican River Basin is a watershed that encompasses parts of Colorado, Nebraska, and Kansas. On December 31, 1942, the states ratified a compact to agree on an interstate allocation of the Basin's resources, which Congress enacted on May 26, 1943. In accordance with the compact, the states created the Republican River Compact Administration (RRCA) to determine whether each state has stayed within its allocation for that year.

Beginning in the 1980s, Kansas reported to the RRCA that Nebraska was violating the terms of the compact by allowing increasing groundwater development, which was reducing the inflow of water to Kansas. Nebraska argued that groundwater pumping was not subject to the compact. In 1999, the Supreme Court granted Kansas' motion for leave to file a bill of complaint against Nebraska and appointed a Special Master who concluded that the compact covered groundwater pumping when it impacted the water supply. After further negotiations, Kansas, Nebraska, and Colorado entered into the Final Settlement Stipulation (FSS), which further established procedures for compliance with the compact.

In 2008, Kansas alleged that Nebraska had overused its water allocations while continuing the groundwater pumping. Kansas sought monetary damages and relief to ensure Nebraska's future compliance; Nebraska rejected those demands and argued that errors in the FSS procedures prevented an accurate accounting of each state's allocation. Pursuant to the FSS, Kansas and Nebraska presented their claims for non-binding arbitration. The arbitrator held that Kansas had clearly incurred damages but failed to adequately prove those damages. Kansas subsequently sought leave to file a petition in U.S. Supreme Court, but Nebraska argued that that Kansas' claims did not merit exercise of the Court's jurisdiction while Nebraska's claims about errors in the FSS procedures did.

Question

Did Nebraska violate a compact apportioning the water resources of the Republican River among Kansas, Nebraska, and Colorado?

John G. Roberts, Jr.:

Elena Kagan:

In this case Kansas and Nebraska ask us to settle a dispute over their rights to the waters of the Republican River.

Those two states have long been parties to a compact, an agreement, apportioning those waters between them, saying how much of the river each state can use each year.

That compact needed to be approved by Congress, and when it was it became federal law.

A prior round of litigation about the meaning of the compact ended in a settlement, but implementing that settlement gave rise to further disputes.

This Court has what's called original jurisdiction over disputes between states.

That means those cases come straight to us without going through any Lower Courts.

What we usually do when we get one of these cases is to appoint a special master to hear evidence and give us a recommendation of how the suit should be resolved.

That's what we did here and today we affirm the master's recommendation on all counts.

There are two main issues.

The first concerns proper remedies for a compact violation.

Everyone agrees that in the first years after the settlement Nebraska used more than its share of Republican River water and that it must pay for the damages Kansas incurred as a result.

But the master recommended that Nebraska pay more on top of that.

That it do something called disgorge profits, meaning give back some of what it gained from its compact violation, even beyond what Kansas lost.

That's an unusual remedy for a contract breach.

But today we approve it.

We agree with the master that Nebraska's overuse of water was no mere accident or even negligence.

Rather, Nebraska recklessly disregarded Kansas' rights, refusing to cut back on its use of water, even when it became clear that would pose a significant risk of harm to Kansas.

To deter that kind of misconduct in the future we decide that an extra award of damages is appropriate.

The second main issue is whether we can modify a technical appendix to the settlement called the accounting procedures to ensure that it properly reflects the intent of the parties in entering into the compact and settlement.

Nebraska asked for that change going forward, and the master recommended we make it.

The problem arises because the compact was supposed to apportion only water from the Republican River.

No one intended that the state's use of other water from other rivers would be affected at all.

But for various reasons the accounting procedures, which are supposed to be used to compute how much Republican River water the states use, end up counting some water from the Platte River.

That means that each year Nebraska gets charged for some water it should get for free.

The change the master proposed would prevent that from happening.

Again, this is an unusual contract remedy.

Normally Courts don't change any part of an agreement, even a technical part that parties have entered into.

But we think it's right to make the modification here.

It's clear that the parties did not mean for the accounting procedures to have this effect and it's clear that this unintended consequence distorts the apportionment that the parties did have in mind.